Product-Led Growth: What You Need to Know

Consumer behavior is the ultimate driver for product-led growth (PLG). Everyone seeks information and opinions about a product before making a purchase. According to Business 2 Community, 44 percent of respondents prefer to do their own research before engaging with a salesperson, so a powerful way to meet that customer demand is by offering product trials and providing a hands-on experience. 

PLG is a business strategy with many names: bottom-up sales, freemium, and try before you buy are just a few familiar ones that you’ve likely heard before. It leans on a smooth product experience that immediately delivers value to the end-user, and it’s the product itself that drives customer acquisition and retention, lead conversion, and business expansion. This amazing concept can be scary to adopt for an established business with a large sales team, but don’t worry your team can adapt to PLG.

Check out the “Discover Your Product-Market Fit Along the Customer Journey” course in the Conquer Local Academy.

By now you’re probably asking, “how do I make money off of free trials?” The product-led growth strategy serves up a tasty product that users want to share with their contacts simply because it makes their job or life easier. The value provided by the product propels it through that individual’s network of coworkers, friends, and family. From that first tier, it creates a ripple effect, and those who see the same value then share the product with their network and so on. 

PLG products give users value with that first taste, and with a well-executed PLG plan products sell themselves by being a remedy for the end-users pain-points. If the free version is already starting to solve their problems, the premium product is likely to be an easy upsell.

Sales-led vs. product-led 

Will adopting this approach affect your sales team, and what might happen to them if you were to adopt a product-led growth strategy? Jacqueline Cook, Chief Operating Officer at Vendasta spoke on this subject at the 2019 Conquer Local Conference. According to Cook, it is very much about creating highly cross-functional teams between product and sales. This approach to selling actually makes it easier for sales teams to convert leads because you just have to offer a paid upgrade of a product that the lead already likes and is using. 

“Sales do not get replaced by the product. Product-led growth accelerates sales because our salespeople become more informed about our customers. They understand more deeply about the individual or business needs, and they match solutions to fit that.”

Jacqueline Cook

COO, Vendasta

Cook explains that becoming a product-led growth company helps in the following ways:

  1. It decreases customer acquisition costs
    1. Users are simply starting on their own instead of undergoing a hand-held one on one process
  2. PLG increases customer retention
    1. Users find value in your product from the start and they want to keep using the product because it makes their lives easier
  3. It captures more lifetime value with those customers
    1. Free trials provide a good base, and from there, users are immersed in the product experience.

Businesses can more easily adopt a PLG strategy by adjusting the organizational structure to fully align with that strategy. When product and sales teams have the same goal of getting people to sign up and use the platform, it reduces friction and contributes to the cross-functional team approach. 

Sales and product teams can successfully work together to feed different markets. Cook and Wes Bush, author of Product-Led Growth, discuss how sales teams are still necessary with PLG. Larger enterprise customers have the money but not necessarily the time to learn the ins and outs of a product, so they require more of a handheld experience. However, smaller businesses have less money to burn and take it upon themselves to learn how to use a product. This hands-on market is why product-led growth is focused on creating a friction-free experience for the end-user.

Listen to the Product-Led Podcast: How Vendasta Went All-In on Product-Led Growth, with Wes Bush and Ramli John.

Product-led growth requires end-user focus

Jeff Hardison, head of product marketing at Clearbit advises companies interested in becoming product-led to start small and it’s best if the product doesn’t require the audience to be too tech-savvy. According to Hardison, you can’t be everything to everyone and by keeping it simple you’re being inclusive to a larger audience.

“You need to make your products so easy to use and so intuitive to use. You (also) have to allow those that are just too busy to be taken through the software with a white-glove experience, give them that opportunity as well. Some people have more time than money, others have more money than time, and if you ignore one of those cohorts you’re really short-handing yourself.”

Jacqueline Cook

COO, Vendasta

Unlike a completely sales-focused model, product-led growth targets the end-user. Dropbox is a great example of product-led growth. It offers a simple-to-use solution for file-sharing and saving, and both are functions that people use daily. Dropbox users champion the product by sharing files with others through the product, expanding the Dropbox network among their own peers. The positive user experience then prompts those new users to continue sharing files through Dropbox with other potential customers exposing them to the tool and the brand every time.

The key to product-led growth

Services like Netflix have used a product-led growth strategy since their beginning. They offer a free trial, and when that trial is over those customers make the choice to upgrade to a paid version if they liked the experience. This friction-free self-service is simple, offers value right away, and leaves the customer wanting more.

Product-led is all about winning customers by delivering value first before asking them to make a purchase. Check out the Vendasta Local Business Online Toolkit that marketing and ecommerce agencies can offer as a free trial to their local business customers.

Learn more about the Local Business Online Toolkit and how it can support your product-led growth strategy today.

About the Author

Emily is a Content Marketing Specialist at Vendasta. Over her career, Emily has worked as a Marketing Strategist, freelanced as a Social Media manager, and enjoyed working events for local and national not-for-profit agencies. When she's not researching her next blog topics you can bet she's challenging a friend to a card game or planning a hike in the wilderness.

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